That was quick. British bank Standard Chartered PLC has agreed to pay $340 million to settle claims by the New York State Department of Financial Services that it conspired to hide some $250 billion worth of financial transactions over a decade for Iranian clients, in apparent defiance of international sanctions.

The most surprising element of the deal is that it was struck so rapidly – only eight days after the 10-month-old state agency publicly levied the accusation, breaking ranks with other regulators and with the Justice Department and the Federal Bureau of Investigation, both of which are still probing the bank’s actions. In the space of that week, however, Standard Chartered had seen the value of its shares fall by about 7 percent, giving it an impetus to settle the matter as rapidly as possible.

The fact that a deal was inked? Well, however much many of us would love to see some of these allegations publicly aired, the truth is that neither side can afford it. Whether it’s Goldman Sachs (GS), Bank of America (BAC) or Standard Chartered, there is simply too much risk associated with a public airing of dirty linen – or linen that is even slightly soiled.

Meanwhile, regulators don’t want to risk their case falling apart: It’s hard to explain complex financial terms to juries made up of laypeople. Moreover, their own resources simply aren’t extensive enough to push anything other than the most egregious cases to the trial stage.

Now that the deal is done, we all get to switch our attention to perhaps less vital but far more gossip-worthy elements of the case. For instance, what will happen to the Deloitte & Touche exec (and Obama fundraiser) who is alleged to have watered down a money laundering report on Standard Chartered delivered to regulators? Neither Michael Zeldin nor Deloitte has been charged with any wrongdoing; Deloitte says the claims that it breached any ethical or legal guidelines are “a serious distortion of the facts.”

That doesn’t change the fact that Wall Street has begun chatting about former Big Five accounting firm Arthur Anderson, brought down by its involvement in scandals like that of Enron. There’s no reason to believe that Deloitte has done anything wrong, but in a world of banks behaving badly, conspiracy theorists are hunting everywhere for possible collaborators.

Above all, however, the Standard Chartered case has dragged a long-simmering rivalry back to public attention once more. During the 20th century, New York seized the title of the world’s financial center from London; for the last decade or two, residents of the city of London have been plotting to retrieve that title.

What makes a world financial center? New Yorkers argue it’s the volume of the transactions; Londoners might point to their city’s strategic location, smack in between the Asian and North American trading centers and on the fringes of Europe. Someone setting up shop in London can do business with the world, not just with North Americans, they point out.

Bank of England Governor Mervyn King spoke out pointedly in criticism of the New York regulator’s actions in charging Standard Chartered, implying that the U.S. agency broke a kind of gentleman’s agreement. Speaking to British newspapers, King huffed and puffed about the idea of “one regulator but not the others (going) public while the investigation is still going on” and went on to ask regulators to “refrain from making too many public statements” about the case until a formal investigation is completed. (The comments came during a press conference at which King was asked whether the New York actions were part of a “trade war” against the City of London; King said he doesn’t think anything of the kind is underway.)

Regardless, banking regulators on both sides of the pond are under pressure. Increasingly it has become clear that no banking crisis is confined to a single jurisdiction – a lesson that could have been learned back in the 1990s, when copper trading that took place on the London Metal Exchange distorted prices of copper on U.S. exchanges as well. It was only when the two countries’ regulators pooled their resources that they had enough information to realize that a trader domiciled outside both of their jurisdictions – Japanese citizen Yasuo Hamanaka, aka “Mr. Copper” – was responsible for the mess, in what became a $2.4 billion rogue trading scandal in 1996.

In the midst of a period of flux – the Bank of England is about to become that country’s foremost financial regulator – there appear to be more cases than ever on which the two nations’ financial cops could cooperate. These range from the high-profile matter of the Libor rate-fixing scandal and money laundering cases or other cases like that of Standard Chartered, where a bank is accused of violating sanctions laws, to more mundane but still critical topics like harmonizing rules governing derivatives or banks’ capital standards. They could cooperate, that is, if they ever agree on how to do so.

There are very real differences in the ways the two nations have traditionally viewed the idea of regulation, with the U.S. favoring specific rules and British regulators tilting toward what many in the United States view as potentially more lax “principles-based” regulation. (Britain’s Financial Services Authority has insisted that its principles are rules, and it can take action when it finds they have been violated without having to identify a specific law that has been broken.)

There also are more specific sources of tension, such as the apparent disagreement between King and U.S. Treasury Secretary Timothy Geithner over just what Geithner said to him in warning about the possibility of a Libor fixing plot, and when he said it. U.S. authorities apparently believed their British counterparts would take the lead to address that particular instance of banks behaving badly; when they didn’t act quickly, it was another black mark on the British regulatory slate. Conversely, the British see some of Geithner’s comments as tantamount to public embarrassment of the Bank of England.

Was the New York regulatory body’s pre-emptive strike against Standard Chartered a calculated move in this surreptitious conflict between the two would-be financial centers – or simply an attempt by an ambitious regulator to gain additional clout (and resources, thanks to that hefty $340 million fine) for his agency? On balance, the odds tilt in favor of the latter, rather than a suggestion that Superintendent Benjamin Lawsky of the New York Department of Financial Services seized control of the agenda out of frustration at inaction on the British side.

Still, it would behoove regulators in both countries – and elsewhere around the world – to work together. Global financial institutions that behave badly have the potential to wreak havoc on the financial systems of nations in which the misdeeds aren’t necessarily taking place. Standing on points of national pride, getting huffy about perceived slights or other forms of grandstanding aren’t going to help the world’s financial regulators work more smoothly together. And there’s too much at stake for them to get bogged down in territorial tensions.

Business journalist Suzanne McGee spent more than 13 years at The Wall Street Journal before turning to freelance writing. Author of the book Chasing Goldman Sachs, she has written for Barron’s, The Financial Times, and Institutional Investor.